Final and translated into the EU official languages
These Guidelines set forth common European criteria for the assessment of O-SIIs with the aim of striking the appropriate balance between a European framework ensuring a level playing field and comparability across the Union, on the one hand, and the need to take into consideration specificities of Member States' individual banking sectors, on the other.
The European Banking Authority (EBA) updated today the list of other systemically important institutions (O-SIIs) in the EU, which, together with global systemically important institutions (G-SIIs), are identified as systemically important by the relevant authorities according to harmonised criteria laid down in the EBA Guidelines. This list is based on year-end-2022 data and includes the overall score calculated according to the EBA Guidelines and the capital buffer rate that the relevant authorities have set for the identified O-SIIs. The list is available also in a user-friendly visualisation tool.
The EBA Guidelines define the size, importance, complexity and interconnectedness as the criteria to identify O-SIIs. They also provide flexibility to relevant authorities to apply their supervisory judgment when deciding to include other institutions, which might have not been automatically identified as O-SIIs. This approach ensures a comparable assessment of all financial institutions across the EU, whilst still not excluding those firms that may be deemed systemically important for one jurisdiction on the basis of certain specificities.
The list published today aims to increase transparency in the EU by providing an overview of OSIIs, including some key facts about the banks identified. 180 banks were identified as systemically important in 2022 (at the highest level of consolidation in each country) with buffer rates ranging from 0.25% to 3%, as shown in the chart below. Relevant authorities disclose further details on the underlying rationale and identification process for their respective jurisdictions. This additional information may be relevant to understand the specific features of each O-SII and to get some insight in terms of supervisory judgment, optional indicators used, buffer decisions and phase-in implementation dates. As underlined in the Capital Requirements Directive (CRD), the assessment of systemic importance necessary to identify O-SIIs remains under the remit of the national competent or designated authorities.
The European Banking Authority (EBA) issued today its final Guidelines defining the criteria that EU competent authorities will use to identify institutions that are systemically important either at Union or Member State level, the so-called ‘other systemically important institutions' (O-SIIs). These Guidelines aim at setting uniform parameters at EU level while taking into account specificities of Member States' individual banking sectors, so as to achieve an appropriate degree of convergence in the identification process as well as at ensuring a comparable, clear and transparent assessment of systemically important institutions in the EU.
These Guidelines establish common EU criteria for assessing systemically important institutions other than those identified as global systemically important institutions across the EU. The EBA aims to capture the appropriate balance between a European framework ensuring a level playing field and comparability across the Union, on the one hand, and the need to take into consideration specificities of Member States' individual banking sectors, on the other.
For this purpose, the Guidelines envisage a two-step process for the identification of O-SIIs. In the first step, on the basis of mandatory quantitative indicators (related to size, interconnectedness, relevance for the economy, complexity), competent authorities will obtain scores indicating the systemic importance of each bank. Banks scoring above a certain threshold (upper threshold) will have to be identified as O-SIIs, those scoring below a certain threshold (lower threshold) can never be identified as O-SIIs.
In the second step of the process, competent authorities can still qualify banks scoring between the lower and upper thresholds as O-SIIs, by using their supervisory judgment, but only on the basis of a closed list of optional indicators set forth in the Guidelines. To ensure a high level of transparency and comparability, competent authorities are required to publicly disclose the reasons why they make use of their supervisory judgment.
Finally, to reduce the reporting burden for small institutions, competent authorities may decide to exclude very small institutions from the identification process, if they assess that they are unlikely to pose systemic threats to the domestic economy.
These Guidelines have been developed in accordance with Article 131(3) of Directive 2013/36/EU (CRD IV), which mandates the EBA to issue guidelines specifying the criteria for the identification of institutions as systemically important either at Member State or Union level (O-SIIs). In line with the provisions laid down in the CRD, competent authorities can require O-SIIs to hold an additional buffer of up to 2 percent of Common Equity Tier 1 (CET1).
The EBA will closely monitor the application of the Guidelines by national authorities and will periodically review the indicators according to the data received.